Accounts Payable Audits Checklist

Managing accounts payable (AP) effectively is critical to maintaining financial accuracy, compliance, and operational efficiency. However, even the most well-run businesses are susceptible to payment errors, financial leakage, and fraud if audit best practices are not in place.

At Westgate Moore Associates (WMA), we’ve spent over two decades perfecting our approach to payment audits, helping organisations recover over £25 million and strengthen their AP processes. In this blog, we’ve pulled together an accounts payable audit checklist to help businesses improve their payment practices and safeguard working capital.

What is an accounts payable audit?

An AP audit is a detailed review of your company’s accounts payable records and processes. It is used to identify discrepancies, improve payment practices, and ensure compliance and includes reviewing historical transactions, identifying payments discrepancies like duplicate payments, overpayments and uncovering and recovering financial leakage.

By following a structured AP audit checklist, organisations can:

• Minimise errors in payment processing.
• Detect and prevent payment fraud.
• Comply with payment practices and reporting requirements.
• Improve supplier relationships through accurate and timely payments.

At WMA we can help you achieve this and set your business up for financial success. Learn more about our Payment Audit Services today.

Why are accounts payable audits important?

Without regular audits, AP processes can cause financial leakage and compliance issues, leading to further financial complications. Key benefits of a well-executed audit include:

1. They identify payment errors – Discrepances like duplicates and overpayments are common and lead to unnecessary financial losses.
2. They ensure compliance – Organisations must meet reporting standards such as payment practices and reporting required by HMRC.
3. They help prevent fraud – Audits can detect signs of payment fraud and ensure controls are in place to prevent it from happening again.
4. They help drive operational efficiencies – Audits can identify process inefficiencies, streamline business workflows and improve cash flow.

Accounts Payable audit checklist

1. Planning the AP Audit

• Meet Stakeholders – Collaborate with finance teams and key decision-makers to set your audit goals.
• Identify Scope – Decide the defined time period to review the transactions.
• Set Objectives – You can set objectives in areas like duplicate payment audits, compliance reporting, and fraud detection.

2. Review Payment Controls

Strong payment controls ensure accurate processing and reduce the risk of errors and fraud. Key areas to check include:

• Invoice approvals – You should confirm that all invoices are approved by the appropriate people.
• Duplicate payments – Tools can easily be used to identify and eliminate duplicate payments.
• Supplier verification – Verifying supplier names, addresses, and payment details can help prevent fraud and keep on top of what payments are due and when.

3. Analyse AP Transactions

A thorough review of historical accounts payable data will uncover discrepancies and areas of financial leakage. When analysing your transactions you should:

• Check for payment discrepancies – When undertaking this you should review transactions against supplier statements.
• Review outstanding credit notes – You should ensure that all credit notes owed to your business are recovered.
• Monitor late payments – This allows you to identify patterns of delayed payments that could impact supplier relationships.
• Audit payment reporting practices – This helps you ensure compliance with business payment practices and performance reporting requirements.

Automated tools like WMA’s reconciliation software, simplify processes and enhance accuracy, allowing you to quickly process up to 100% of supplier statements. Get in touch with us today for more information regarding our solution.

4. Fraud Detection

Fraud can go undetected without regular audits. In your audit you should:

• Identify any unusual payments – During this process you should flag large or irregular transactions for further investigation.
• Verify high-risk suppliers – You should conduct extra checks for any new or infrequent suppliers.
• Analyse duplicate invoices – During audits you should look out for identical invoice numbers, dates, or amounts.
• Examine manual payments – Manual transactions must be supported by proper documentation. Without them, you may fall victim to fraud.

5. Compliance and Reporting

Staying compliant with reporting regulations is crucial for business success as it prevents penalties, fines and even in some cases business closure. When conducting an Accounts Payable audit you should:

• Submit your payment practices report – This verifies your compliance with reporting requirements for supplier payments.
• Monitor payment performance – You should ensure that all payment times align with contractual terms and legal obligations. Ultimately, you should always be making payments on time to stay compliant.
• Document reporting processes – Throughout the year you must maintain accurate, up-to-date records for a smooth auditing process.

6. Follow-Up and Process Improvement

Once the audit is complete, you will obtain an accounts payable audit report​ where you can complete various actions to strengthen your AP processes and financial health:

• Address root causes – You should identify why errors have occurred and implement process changes to prevent them from happening again.
• Review your supplier file – You should remove duplicate or outdated supplier records and cleanse vendor master data regularly.
• Adopt automation – Implementing automation tools can streamline reconciliations, detect discrepancies faster, and improve cash flow. This helps you stay compliant all year round.
• Compare previous audits – Comparing previous audit results can help you measure improvements and identify trends.

Start Improving Your AP Practices Today

At WMA, we offer accounts payable recovery audit services​ that help reduce errors, prevent fraud, and ensure compliance. By partnering with WMA, you can optimise your AP processes, protect your working capital, and ensure long-term financial health.

Learn more about our Payments Audit services or contact our team to discover how we can help your business thrive.